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Annual Short-term Incentive (Company Bonus Plan)

The short-term incentive arrangement aims at rewarding all employees on an annual basis for their contribution to reaching the company targets that foster the success of Sunrise as well as the achievement of individual targets. There is a defined target-setting process in place. Company targets as well as the individual targets of the Group Management Board are subject to approval by the Board of Directors. Individual targets for each employee are defined using a top-down approach to ensure alignment within Sunrise and across the departments. To support the process and ensure transparency in line with Sunrise values, employees are informed on a quarterly basis of the status of company target achievement in an indicative way. Financial company target achievement is assessed at the end of the year against the audited financial results. Final company target achievement and individual Group Management Board target achievement are subject to approval by the Board of Directors.

The short-term incentive is accrued on a monthly basis assuming 100% target achievement. Any major deviations from the expected target achievement will be reflected in the accrual.

The key features of the Company Bonus Plan are outlined below:

The target short-term incentive for members of the Group Management Board is expressed as a percentage of base salary and amounts to 50%. For the CEO the target incentive is 60%. Overachievement is possible up to 200%, but in any case not higher than the base salary.

The two target categories, company and individual targets, are weighted equally and additively, and accounting for 50% each.

Individual targets consist of a maximum of three quantitative/qualitative targets for all employees in the Company Bonus Plan and a maximum of four quantitative/qualitative targets for managers including the Group Management Board.

The payout of the short-term cash bonus takes place in March of the year following the performance period and is subject to final sign-off by the Board of Directors for Group Management Board members and by the CEO for all other employees. Variable compensation is settled through cash payment for all employees in the Company Bonus Plan. Group Management Board and individually selected Other Top Management can elect to receive a portion of the short-term incentive in shares (see Management Long-Term Investment Program).